Barclays PLC, vying to buy ABN Amro Holding NV in the biggest banking takeover, raised its offer to 67.5 billion euros (US$93.4 billion) after securing investments from the governments of China and Singapore.
Barclays' revised bid is worth 35.73 euros a share, the London-based company said today, 4.3 percent more than its previous offer. The bid, which includes 37 percent cash, remains below the 38.40 euros a share offer made last week by Royal Bank of Scotland Group PLC, Banco Santander SA, and Fortis.
China Development Bank will invest 2.2 billion euros in Barclays, and a further 7.6 billion euros if the bid for ABN Amro succeeds. Singapore's Temasek Holdings Pte, the city-state's investment arm, will invest 1.4 billion euros initially and an additional 2.2 billion euros upon the purchase of ABN Amro.
"China and Singapore, especially through Temasek, have always had a long-term ambition within the global markets," said Lok Yim, head of fixed income and equity for Deutsche Bank AG's private wealth management group based in Hong Kong. "As the renaissance of Asia comes into full fruition, it is only natural that foreign exchange reserves are deployed differently."
ABN Amro shares rose 0.24 euros, or 0.7 percent, to 36.87 euros at 9:06am in Amsterdam yesterday. Barclays advanced ?0.185, or 2.6 percent, to ?7.32 in London, valuing the company at ?47.8 billion (US$98.3 billion).
A merger of ABN Amro and Barclays would create a bank with a market capitalization of more than US$160 billion. The Royal Bank-led group's offer, which will end Oct. 5, is 93 percent in cash. Royal Bank spokeswoman Linda Harper declined to comment.
ABN Amro, which had recommended Barclays' earlier bid, said in a statement today that it will assess the competing offers "in a fair and transparent manner."
"This feels like the final rolling of the dice," said Antony Broadbent, an analyst at Sanford C. Bernstein in London who has an "outperform" rating on Barclays' stock. "It doesn't feel like the winning bid in terms of size or the amount of cash. It closes the gap but it still feels as though the consortium has the upper hand."
China Development Bank is one of the nation's so-called "policy banks," which support the government's development and political agenda by lending for public works and to targeted industries.
Temasek's investment in banks, including stakes in Bank of China Ltd and China Construction Bank, helped bolster its earnings.
"We believe Barclays' board and management understand what it takes to make the Barclays-ABN Amro merger work and deliver value," said Simon Israel, executive director of Temasek.
"It is premature to say the consortium's offer is higher," Barclays chief executive John Varley told reporters on a conference call yesterday. "We have been very careful to enhance our position while giving our shareholders good protection."